The development of fintech is often associated with the transformation of the banking sector. In fact, this process affects all segments of the financial market, including the insurance one. At the same time, the digitalization of a particular financial sphere has its own characteristics and depends on its structure, level of competition, current regulation, and demand for certain types of products.
A feature of the innovative development of modern companies is the change in communication channels and automation of production processes. Many people cannot imagine their life without smartphones. Gadgets are becoming means of communication, information gathering, and payment devices. In this regard, many companies can consider the development and implementation of mobile apps as one of the ways of interacting with their customers, through which clients can get all the necessary info about the products offered, calculate their cost, form their own package of services, conclude and pay an agreement with one or another company.
#1 Payments and money transfers
If we look at the most popular areas of fintech, then first of all payment services should be highlighted. This direction has received significant development in many countries of the world due to the presence of a large number of consumers of these very services, the possibility of cooperation of startups with traditional financial institutions, and the growth of the share of non-cash payments along with the popularization of e-commerce. One of the general factors stimulating payment services development in particular and fintech projects in general in 2020 was also the epidemiological situation due to COVID-19.
A few years ago, businessmen providing services online had to enter into agreements with banks that serviced the transactions of their partners’ clients. Today everything is rather easier – there are many various financial services that allow accepting and transferring charges in a variety of currencies and for a huge amount of platforms.
Moreover, fintech empowers non-financial organizations to enlarge their client base. Fintech tools solve the problem of 2 billion people by providing access to basic financial services. The latest devices and Internet, smartphones, and advanced approaches to financial operations allow providing access to financial payments even where there are no banking institutions.
#2 Banking services
Using new technologies, banks widen the spectrum of services they offer, evolving non-physical service channels, and creating new means of interacting with consumers. For instance, opening an account without visiting a bank office by the client and facilitating plenty of actions.
Banks are steadily deviating from physical channels of interaction with clients to digital and mobile ones. Banking automation solutions development enable banks and financial services companies to process repetitive work more effectively, exclude human factor errors, streamline intercommunications with their customers, and significantly increase back-office productivity.
The result is lower interest rates on loans and higher interest rates on deposits due to savings on business processes. Banking organizations are frequently using data analysis with an eye to better understand the wants of clients, prognosticate them and prepare services that are catching to an extended range of customers on the basis of all that.
The growing popularity of online services will further increase the share of distance services in insurance. Like the banking sector, insurance companies are forced to transform their operations by introducing the newest technologies and offering new ways to interact with customers.
For instance, there are a number of successful projects in the online insurance market in the USA. For example, Lemonade company offers home and tenant insurance without the need to communicate with an insurance agent. You can issue an insurance policy and receive a refund in a few minutes using a special application based on the use of artificial intelligence technologies.
The Fintech development will increase the quality and attractiveness of services provided by personalizing, automating processes, reducing losses for financial companies from fraudulent actions through the use of big data analysis, the introduction of telematics and other remote control systems. Taking into account the rapid transformation based on the introduction of new technologies, it is possible to increase the efficiency of the insurance and financial markets in a relatively short period of time.